The Creighton University Rural Mainstreet Index (RMI) for July rose above growth neutral for the month. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the RMI for July indicated positive growth for the region.
Overall: The overall index fell to 50.2 from 53.2 in June. This is the seventh time in the past eight months that the index has remained above growth neutral. The index ranges between 0 and 100 with 50.0 representing growth neutral, and an RMI below the growth neutral threshold. 50.0, indicates negative growth for the month.
"Higher agriculture commodity prices and rebuilding from recent floods supported the RMI (RMI) for the month. Furthermore, almost 9 of 10 bankers reported tariffs and trade skirmishes have had, or will have, a negative impact on their local economy. This is up from 8 of 10 recorded last September," says Dr. Ernie Goss, of Creighton University who conducts the monthly survey.
Farming and ranching: The farmland and ranchland-price index for July improved to a still weak 45.6 from June's 44.8. This is the 68th straight month the index has remained below growth neutral 50.0.
The July farm equipment-sales index increased to 37.9 from June's 35.7. This marks the 71st straight month the reading has remained below growth neutral 50.0.
Banking: Borrowing by farmers for July remained very strong. The borrowing index slipped to 71.9 from June's 72.6. The checking-deposit index rose to 51.5 from June's 50.0, while the index for certificates of deposit and other savings instruments slumped to 47.1 from 51.6 in June.
Bankers reported that approximately 1 in 10 2018 farm operating loans were not repaid and were rolled into 2019 loans.
But James Brown, CEO of Hardin County Savings Bank in Eldora, Iowa, said, "I think you will find that most banks don't roll over 2018 unpaid operating notes into the 2019 LOC notes. If there is still grain to cover operating debt, we extend the loan until it is marketed."
Less than half of the bank CEOs think the Federal Reserve should reduce short-term interest rates at their July meetings.